When your customer signed his/her last copier lease, did he/she happen to take the time to read that lease? How about the maintenance agreement? If they’re like most lessees, they probably skimmed over the verbiage on the lease and then signed the maintenance agreement without reading the terms and conditions (T&Cs).
For those of us that are in the copier sales business, I thought I would write this to use with those prospects and clients that are not familiar with copier leases. In addition, this blog brings awareness that there are some vendors that have clauses in their leases that, well, let’s just say that they are not in the best interest of the client. As such, sales reps can view this as an educational checklist to help prevent headaches and heartaches for their customers.
Not reading those T&Cs could lead to some problems in the future, because there are clauses in those agreements that will increase costs.
- Maintenance included with the lease: Some leases have a clause that allows the lessor to raise the monthly payment for hardware and maintenance/supplies by 10% or more per year.
- Insurance with the lease: Yes, lessees are required to have insurance on the leased equipment. Most leasing companies will bill them for insurance which is added to the monthly payment. This is an additional profit center for some leasing companies.
- Escalating Maintenance/Supply Agreement: Almost all maintenance/supply agreements have a built-in annual escalator clause. In most cases, there is a clause that states something like, “we may raise your rate annually.” All maintenance/supply agreements are raised annually because as the systems get older, they are more costly to maintain. However, there have been instances where the annual cost can increase as much as 25% each year.
- Return of Leased Equipment: At the end of the lease it is the lessee’s responsibility to de-install, perform any repairs, pack and ship the copier back to the leasing company’s facility at the cost of the lessee.
- Early Termination of the Lease: The lessor can charge an early return fee along with the remaining stream of payments in order for the lessee to return the copier before the end of the term.
- End of Lease Notification: All copier leases have an end-of-lease notification clause. Some are palatable, like the 30-day notification before the end of the lease. Others only provide a “window” of when the lessor can be notified that the client’s intent is to return the equipment at the end of the lease. If they don’t execute the letter of intent to the leasing company on time, they can charge additional lease/rent payments.
Given these six potential pitfalls with a copier lease, it’s up to your customer to read the lease, read the maintenance/supply agreement. If they have any questions, then ask. It’s their money.
Below are some questions I would ask for each one of the above questions.
- Do I have to have maintenance/supplies included in the lease?
Can we negotiate the cost of the annual increase?
- Can I use submit a rider to the leasing company listing them as the loss payee in case of a catastrophic loss?
- Can we negotiate the annual increase for the maintenance/supply agreement?
What is the percentage of the annual increase for each year of the lease?
- If we upgrade our current lease with your dealership, can you take care of the return costs and shipment?
- What is the cost for early termination?
- Is there a chance to get this changed to a 30-day notification clause?
Please feel free to email me apost@p4pHotel.com if you have any questions or comments.
Be sure to check out Art’s website at www.p4photel.com and his blogs at www.p4photel.com/blog.
